accounting ch 1

The following transactions occurred during July: a. Received $900 cash for services provided to a customer during July. b. Received $2,200 cash investment from Barbara Hanson, the owner of the business. c. Received $750 from a customer in partial payment of his account receivable, which arose from sales in June. d. Provided services to a customer on credit, $375. e. Signed a promissory note for a $6,000 bank loan. f. Received $1,250 cash from a customer for services to be rendered next year. What was the amount of revenue for July? Answers: $900 $1,275 $2,525 $3,275 $11,100

$1,275

On September 30, the Cash account of Value Company had a normal balance of $5,000. During September, the account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the Cash account at the beginning of September? $0 balance $4,300 debit balance $4,300 credit balance $5,700 debit balance $5,700 credit balance

4,300 debit balance

A company has total liabilities of $550 million and total equity of $300 million. Calculate this company's debt ratio. Selected Answer: 64.7% Answers: 64.7% 100% 54.5% 1.83 to 1 The debt ratio cannot be determined without additional information.

64.7%

A credit is used to record: An increase in an asset account. An increase in an unearned revenue account. A decrease in a revenue account. A decrease to retained earnings.

An increase in an unearned revenue account

Which of the following list of events properly reflects the early steps taken in the accounting process? Answers: Record relevant transactions, post journal information to ledger accounts, analyze each transaction, and prepare and analyze the trial balance. Post journal information to ledger accounts, analyze each transaction, post journal information to ledger accounts, and prepare and analyze the trial balance. Prepare and analyze the trial balance, analyze each transaction, post journal information to ledger accounts, record relevant transactions. Analyze each transaction, post journal information to ledger accounts, record relevant transactions, and prepare and analyze the trial balance. Analyze each transaction, record relevant transactions, post journal information to ledger accounts, and prepare and analyze the trial balance.

Analyze each transaction, record relevant transactions, post journal information to ledger accounts, and prepare and analyze the trial balance.

Which of the following is a true statement regarding debits and credits? Answers: If a company earned a profit, debits will not equal credits. For a business, debits are better than credits. A company's books are not in balance if they have a current period loss. Assets and expenses are both increased with a debit. Liabilities and equity are both increased with a debit.

Assets and expenses are both increased with a debit.

Prepaid expenses are: Answers: Payments made for products and services that do not ever expire. Classified as liabilities on the balance sheet. Decreases in retained earnings. Assets that represent prepayments of future expenses. Promises of payments by customers.

Assets that represent prepayments of future expenses

The right side of a T-account is a(n): Answers: Debit Increase Credit Decrease Account balance

Credit

Wisconsin Rentals purchased office supplies on credit. The journal entry made by Wisconsin Rentals to record this transaction will include a: Debit to Accounts Payable. Debit to Accounts Receivable. Credit to Cash. Credit to Accounts Payable. Credit to Retained Earnings.

Credit to Accounts Payable.

Source documents include all of the following except: Answers: Sales tickets Ledgers Checks Purchase orders Bank statements

Ledgers

The Fireside Country Inn is a very popular destination for tourists. The Inn requires guests to make reservations at least two months in advance of their stay. A 20 percent down payment is required at the time the reservation is made. When should this inn recognize room rental revenue? Selected Answer: On the date the guests stay in the inn. Answers: On the date the reservation is received. On the date the money for the reservation is received. On the date the guests stay in the inn. On the date the guests pay the remaining 80 percent due. Once all cash has been received.

On the date the guests stay in the inn

Of the following accounts, the one that normally has a credit balance is: Answers: Cash Office Equipment Sales Salaries Payable Dividends Sales Salaries Expense

Sales Salaries Payable

An account used to record the owners' investments in the business is called: Answers: Dividends Common Stock Revenue Expense Liability

Selected Answer: Common Stock

For what reason do most sellers require customers to have their receipts in order to exchange or return purchased items? Answers: The receipt contains coded information that the seller needs to prepare and analyze the trial balance. Sellers wish to ensure that the sale in question was rung up on the register in the first place. This is a legal requirement mandated by a federal law. The receipt is serving as a promissory note. To create an environment in which customers do not want to return items.

Sellers wish to ensure that the sale in question was rung up on the register in the first place.

Which of the following statements about the Cash account are true? Answers: Because most companies earn their fees in cash, the Cash account is categorized as revenue. For any given transaction, Accounts Receivable and Cash can be used interchangeably because both accounts are measured in terms of cash. The Cash account includes the value of any medium of exchange that a bank accepts for deposit. Cash is the same thing as Retained Earnings. Cash is a liability account.

The Cash account includes the value of any medium of exchange that a bank accepts for deposit.